Law Firm Demands Transparency Surrounding Bank Account Closures In Order to Protect Consumer Rights

Over the past few weeks, UK law firm Setfords has been carefully monitoring the turbulence between banks and innocent people affected by erroneous ‘fraud markers’. Now, Jeremy Asher, Senior Consultant Regulatory Solicitor, is demanding transparency from banks about account closures in order to protect consumer rights.

In a petition launched this week, he is calling on Nikhil Rathi, CEO of the Financial Conduct Authority (FCA) to intervene and require banks and other financial organisations to adopt a clear and transparent code of conduct regarding the process of shutting down customers' bank accounts, commonly known as ‘debanking’.

Furthermore, Jeremy is also calling on Chancellor of the Exchequer Jeremy Hunt and the Government to extend the FCA's regulatory remit to include oversight of the activities of the fraud marker database operators - who are Cifas, Synectics Solutions and National Hunter.

In the past year, 340,000 bank accounts have been closed without explanation. These Fraud marker database operators currently operate in an unregulated way, offering little or no transparency of their activities, with no straightforward route for challenge or redress for people who are not guilty of any wrongdoing. The current lack of transparency surrounding debanking practices has left countless individuals vulnerable to arbitrary account closures without valid explanation or recourse. This not only disrupts people's financial stability, but also leads many individuals into financial distress and undermines their trust in the banking system as a whole. 

One significant issue contributing to unjust debanking actions is the reliance on fraud markers, such as Cifas, which can be loaded against an individual without their knowledge or consent. These markers often stem from mistaken identity or incorrectly interpreted information that may only come to light several years later, leading innocent customers to suffer severe consequences without any opportunity for redress. A survey conducted by Consumer Action Law Centre revealed that 62% of respondents who had experienced debanking felt they were treated unfairly during the process. The absence of clear guidelines allows some banks to shut down accounts based on subjective criteria, leading to potential discrimination against certain individuals or communities.

By implementing a clear code of conduct enforced by the FCA, we can ensure that banks are obligated to provide detailed explanations when closing accounts, adhere to strict guidelines when loading markers, and ensure that all the fraud databases provide affected individuals with an arbitration system of appeal and publish the standard of proof they expect the banks to work to. This will promote fairness and transparency and protect innocent customers from undue harm caused by erroneous fraud markers.

Jeremy Asher says “For the past few weeks, I have been waging a campaign in the media that highlights how Cifas and other fraud markers, which have been wrongly applied by banks and other financial institutions, are seriously impacting the lives of innocent people.  My day-to-day legal work as a Solicitor at law firm Setfords involves helping people in that unfortunate position to get these markers removed.   

“In recent weeks, due to the ongoing national media publicity surrounding ‘debanking,’ my case work has dramatically increased with hundreds of consumers reaching out for my help. There is an invisible crisis in the UK banking and financial industry that is impacting innocent people, and it requires urgent action and intervention from the FCA and Government in conjunction.

“The problem I am trying to solve is to stop risk-averse financial organisations from relying too heavily on technology, specifically artificial intelligence (AI), in order to make decisions that can have a disastrous impact on a person’s life, work and financial opportunities.

“There needs to be sensible human involvement in the process that can override the ‘computer says no’ mentality that is quickly settling into the decision-making processes, as has been demonstrated in recent publicity.”

Jeremy and Setfords are calling on the FCA to take immediate action and enforce a transparent code of conduct for banks and the fraud marker databases, ensuring that customers are provided with clear explanations and avenues for appeal when their accounts are closed.

By doing so, trust can be restored in the banking system and innocent individuals can be protected from unjust debanking actions.